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Without mentioning former Mayor Richard Daley's name, current Mayor Rahm Emanuel explains some of the flaws with the previous administration's handling of city finances. (Published Friday, July 29, 2011)

It's no secret that Chicago is in debt, along with Cook County and the state of Illinois.

Just how big is the city's 2012 projected budget hole? $635.7 million, Mayor Rahm Emanuel revealed Friday morning in what he called the "first ever Annual Financial Analysis."

"We have a structural problem," Emanuel said. "The moment of truth has arrived."

Revenues are expected to be down 19 percent, and income tax revenue likely will dip by 12 percent because of a smaller population. Emanuel told reporters he "obviously" will present a balanced budget, but he won't raise taxes doing it.

"I won't nickel and dime taxpayers," he said. "I can't ask people to pay and put more money into a system that needs restructuring. The capital I won't spend is taxpayer's dollars. This system needs reform, it has called out for it."

He wouldn't say whether job cuts or layoffs are possible.

Emanuel said he already has adopted a strategy of "cut and investment" by making cuts to the central office and central management, and investing in what will benefit the city's economic future.

"Competition will now be the operative theory of public government," he said. "Competition when it comes to recycling in neighborhoods will be how we govern, how taxpayers will get best service for tax dollars."

“City unions have already shown how Mayor Emanuel can save a quarter-billion dollars by cutting costly contracts, reducing excess management and working with frontline employees to provide services more efficiently," Bayer said in a statement. "We call on the mayor to commit to preserving essential city services and jobs instead of fat contracts and redundant management.”